Understanding Day Trading

 Day trading is not investing, which is when you buy a stock in hope it will go up over the long term. Day trading the buying and selling a stock within the trading hours. This can occur in two different markets, the stock market and the forex market (foreign exchange market. They use high amount of leverage and short term trading strategies and capitalize on small price action. A typical trader is well-funded and well educated.  Day traders often use borrowed money (also known as margin) to take advantage of small price movements in highly liquid stocks or indexes. In general, they follow the same wisdom as longer-term investors: They try to buy low and sell high, they just do it in a very compressed window of time. Day traders often only hold stocks for 1 minute to 1 hour. Also day traders find stocks with high volatility and use stock studies and patterns to predict price movements.   Day traders need to keep up on the latest stock market news and events that affect stocks – the Fed's plans for interest rates, the economic outlook, etc. Do your homework. Make a wish list of stocks you'd like to trade and keep yourself informed about the selected companies and general markets. Scan business newspapers and visit reliable financial websites.